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By Bourne

This publication is a revision relief for undergraduate scholars of corporation legislations.

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For this same reason, general objects clauses are not beloved of examiners. Problems are far more likely to involve restrictive objects clauses. If a company has as its one and only object, for example, ‘The organising of foreign holidays in the Aegean’, if the directors propose that the company should start to manufacture motor cars, a shareholder will be able to obtain an injunction to restrain this (s 35(2) of the Companies Act 1985). Such a move is only possible, however, as a pre-emptory strike before the company has entered into a transaction—no later.

Before statutory intervention, therefore, the question was relatively simple. If the objects clause covered the relevant contract, it was valid; if it was outside of the company’s permitted range of activities, it was void. The whole doctrine rested on the principle of constructive notice, the rule in Ernest v Nicholls (1857), whereby a person dealing with a company was deemed to know the contents of the company’s memorandum of association and articles of association. On occasion, the question might be slightly more problematic.

In the consultation document Company Formation and Capital Maintenance, issued in October 1999 by the Steering Group for the Department of Trade and Industry’s Review of Company Law, it is suggested that a single document should replace the memorandum of association and articles of association, namely, a standard registration form on incorporation. However, currently, both a memorandum of association and articles of association are required. 17 ESSENTIAL COMPANY LAW The contents of the company’s memorandum The memorandum of association or memorandum (as it is generally known) is sometimes termed the external constitution of the company.

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